BIR Ruling No. 342-2017

REPUBLIC OF THE PHILIPPINES

BUREAU OF INTERNAL REVENUE DEPARTMENT OF FINANCE

Quezon City

Section 30 of the National Internal BIR Ruling No. 444-2014 Revenue Code of 1997.as amended BIR Ruling No.001-2017:

3422017 7-12-2017

THE SANDY PROJECT.INC.

Legaspi Village, San Lorenzo, City of Makati Unit 22 2/F Zeta Bldg.,191 Salcedo St NCR 4th District, Philippines 1223

Attention: ATTY MA. LOUELLA M. ARANAS

Gentlemen:

This refers to your letter dated March 14, 2017, requesting on behalf of THE SANDY PROJECT, INC. for the issuance of a certificate of tax exemption enjoyed by non-stock, non- profit corporation or association pursuant to Section 30 of the National Internal Revenue Code (NIRC) of 1997. as amended.

organized and existing under the laws of the Republic of the Philippines; that it is registered with the Securities and Exchange Commission (SEC) under Company Registration No. Identification No.(TIN) It is represented that THE SANDY PROJECT, INC. with BIR Taxpayer's and with SEC Certificate of Incorporation dated November 22, 2016; and that dated January 24, 2017, is a non-stock, non-profit association duly and Certificate of Registration No. OCN

the purpose tor which the association was incorporated is to raise awareness about dengue by conducting lectures to children in the different parts of the country; to educate the children on how to prevent dengue virus.

Certificate of Tax Exemption because THE SANDY PROJECT,INC. has to prove by In reply, please be informed that this Office cannot as yet issue the requested

tax under Section 30 of the National Internal Revenue Code of 1997, as amended. (BIR Ruling actual operation for at least three (3) years that it is really an association exempt from income

No. 001-2017 dated January 05, 2017)

In the meantime. THE SANDY PROJECT,INC. can file the necessary annual information return instead of an income tax return on or before the fifteenth (15th) day of the fourth (4th) month following the end of its taxable year as required under Section 24 of Revenue Regulations No. 2-40 dated February 10, 1940.' Based on such information return. we shall conduct the necessary investigation on the activities undertaken during the period. The letter of exemption shall thereafter be issued depending upon the result of our investigation.

derived from any of its properties, real or personal, or any activity conducted for profit taxes imposed under the National Internal Revenue Code of 1997, as amended, on its income regardless of the disposition thereof, which income should be returned for taxation. Thus, THE SANDY PROJECT, INC. is subject to the corresponding internal revenue

1 Collector vs. Sinco. G.R. L-9276 dated October 23. 1956

#3422017

THE SANDY PROJECT, INC. 7-12-2017

bank under the expanded foreign currency deposit system shall be subject to 7-1/2% final withholding tax pursuant to Section 27 (D) (i), in relation to Section 57 (A), both of the National Internal Revenue Code of 1997, as amended. (BIR Ruling No. 444-2014 dated benefits from deposit substitute instruments and from trust funds and similar arrangements, and royalties derived from sources within the Philippines are subject to the twenty percent (20%) final withholding tax: provided. however,that interest income derived by it from a depository October 30, 2014) Likewise, interest income from currency bank deposits and yield or any other monetary

as withholding agent of the government if it acts as an employer and its employee receives compensation income subject to the withholding tax under Section 79 (A), Chapter XIII, Title II of the National Internal Revenue Code of 1997, as amended. as implemented by Revenue Also, it should be understood that THE SANDY PROJECT, INC. shall be constituted

Regulations No. 2-98. as amended. or if it makes income payments to individuals or corporations subject to the expanded withholding tax provided for in Section 57 (B) of the National Internal Revenue Code of 1997. as amended, also as implemented by Revenue Regulations No. 2-98, as amended.

amended, any provision of existing general and special law to the contrary notwithstanding. tax liabilities, if any. incentives shall be subject to examination by the BIR for purposes of ascertaining compliance with the conditions under which it has been granted tax exemptions or tax incentives, and its the books of accounts and other pertinent records of tax-exempt organization or grantees of tax Moreover, under Section 235 of the National Internal Revenue Code of 1997, as

Pesos (PhF Furthermore, it is subject to the payment of the annual registration fee of ) as prescribed in Section 236 (B) of the National Internal Revenue Code ot 1997, as amended. It is also required to issue duly registered receipts or sales or commercial invoices for each sale or transfer of merchandise or for services rendered which are not directly

to Section 237 of the same Code (Revenue Memorandum Circular (RMC) No. 76-2003). related to the activities for which the Association is registered under Section 6 (C) in relation

Value-Added Tax

Section 105 of the National Internal Revenue Code of 1997, as amended, provides that:

business. sells, barters, exchanges, leases goods or properties, renders "SEC. 105. Persons Liable. - Any person who, in the course of trade or

services, and any person who imports goods shall be subiect to the value-added tax (VAT) imposed in Sections 106 to 108 of the same Code.

XXX XXX XXX

conduct or pursuit of a commercial or an economic activity, including The phrase "in the course of trade or business" means the regular

transactions incidental thereto, by any person regardless of whether or not the person engaged therein is a non-stock, non-profit private organization (irrespective of the disposition of its net income and whether or not it sells exclusively to members or their guests), or government entity.

XXX XXX XXX *

it shall be liable for VAT. services in the course of a business pursuit, including transactions incidental thereto, in general. Accordingly, if THE SANDY PROJECT, INC. is engaged in the sale of goods or

THE SANDY PROJECT, INC. #342-2017 7-122017

properties or services and importation of goods shall nevertheless be subject to the 12% VAT pursuant to Sections 106 to 108 of the said Code. Notwithstanding that it is a non-stock, non-profit corporation, its purchase of goods or

buyer/purchaser, transferee or lessee of the goods, properties or services. Once shifted to the buyer/customer as an addition to the cost of goods or services sold, it is no longer a tax but an purchaser of goods. Being an indirect tax, the amount of tax may be shifted or passed on to the additional cost which the buyer/customer has to pay in order to obtain the goods or services. It must be noted that VAT is an indirect tax payable by the seller and not by the

stock, non-profit activities, is exempt from the 12% VAT. services or sale of goods made in the course of business but rather in connection with its non- However, revenue from contributions and donations, not being derived from sale of

following documents pursuant to Revenue Memorandum Order (RMO) No. 20-2013 dated after the three (3)-year period, THE SANDY PROJECT, INC. is required to submit the July 22,2013: Finally,for purposes of securing a Certificate of TaxExemption

A. Original copy of application letter for issuance of Tax Exemption Ruling The letter shall cite the particular paragraph of Section 30 of the National Internal Revenue Code of 1997, as amended, under which the application for exemption /revalidation is being based;

B.SEC Certified true copy of its Certificate of Incorporation

C. SEC Certified true copy of its Articles of Incorporation or latest Amended Articles of Incorporation which must specifically include and clearly state the following provisions:

1. That the association is non-stock, non-profit;

2. That the primary purpose for which the association was created is one of those enumerated under Sec. 30 of the National Internal Revenue Code of 1997. as amended:

3 That no part of the net income of the association shall inure to the

benefit of any its members or private individual:

4. That the trustees of the non-profit association do not receive any compensation; and

5. In case of dissolution, its assets shall be distributed to one or more

entities formed for the purpose / purposes similar to its own, or to Memorandum Circular No. 51-2014): thePhilippinegovernment for ' publicpurpose(Revenue

D. SEC Certified true copy of its By-Laws or latest Amended By-Laws:

E. Original copy of a Certification under Oath by an executive officer of the

association as to:

1. all previous amendments / changes in the Articles of Incorporation shall state this fact); and By-laws (If there are no amendments / changes, the Certification

2. manner of activities; and

THE SANDY PROJECT, INC. 1 3422017 7122017

3. the sources and disposition of income, if any. of the subject

association;

F. Certified true copy of its BIR Certificate of Registration:

G. Original copy of a Certification under Oath by the treasurer of the

association as to the amount of income. compensation. salaries or any emoluments paid by the association to its trustees, officers and other executive officers;

H. Original copy of a Certification issued by the Revenue District Office

(RDO) where the association is registered that the association is not the subject of any pending investigation, on-going audit, pending tax assessment, administrative protest. claim for refund or issuance of tax credit certificate, collection proceedings, or a judicial appeal; or if there be any the original copy of a Certification issued by the RDO on the status thereof

Certified true copies of its Income Tax Returns or Annual Information Returns and Financial Statements for the last three (3) years of operation; and

J Original copy of a Statement under Oath by an executive officer of the association as to its modus operandi which shall include:

1. A full description of the past, present, and proposed activities of the association:

2. A narrative description of anticipated receipts and contemplated

expenditures; and

3. A detailed description of all revenues which it seeks to be exempted statement or application shall be subjeci to income tax. from income tax. All other revenues which are not included in the

This ruling is being issued on the basis of the foregoing facts as represented. However. if upon investigation, it will be ascertained that the facts are different, then this ruling shall be considered null and void.

Very truly yours.

1a01

Commissioner of Internal Revenue CAESAR R. DULAY

007678 K-1-JAC